Why buy to let?

jamels2

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ACG

Buy to lets (BTL) can be on a repayment basis. Im not so sure many of them are though.

A buy to let is there to provide an income, so if house prices do go up or down it wouldnt make too much difference as the property isnt being sold.
As for interest rates, chances are that if interest rates go up for one landlord they will do for others which will push the local rental prices up if the local market can support the higher rent. If not then the landlord could be out of pocket.

Typhoon2000

Buy to let mortgages are a cheap way of borrowing money for your Bussiness ( letting property) over a longer period. You need to decide how to run the Bussiness and if it will make money for you. You cannot normally live in a proprty you have a buy2let mortgage on according to the t&c's.
As with any Bussiness, you have allowable Bussiness expenses for the purposes of income tax, and yes interest charged on money borrowed to operate the Bussiness is one of the allowable deductions. If your Bussiness makes a loss ( interest goes very high, no rent etc..) then there is no tax to pay.

kingstreet

Typhoon2000 wrote: »

You cannot normally live in a property you have a buy2let mortgage on according to the t&c's

As long as your intention is to let the property from the outset and you later decide to live in the property, there is nothing wrong with residing in a property mortgaged on a buy to let basis.

Conrad

It's a business like any other.
Done well it can result in a profitable long term business.

It's all about minimising risk and maximising income. Personally I favour small flats as they are the easiest to let, and there is far less maintenance to bother with. Ok you pay a service charge but you'd pay extra costs with a house anyway such as property insurance, roof and fence and garden maintenance and so on. Some flats have very low cost service charges anyway. You can find a studio at £90k that will let for £800 pm in parts of London.

Thrugelmir

jamels2 wrote: »

Can I just ask the purpose behind buy to let? I've been told buy to let's are interest only mortgages, so capital is not being repaid.

A fad borne out of the rapid capital appreciation in house prices in recent years.

As now. When prices stagnate. Profit needs to be made from rental income.

The aim of any business should be to generate an after tax profit. This can then used to either repay capital debt or invest into further income producing assets.

Many with BTL interest only mortgages may find themselves treading water. Longer term even losing their deposits. Once all purchase and sale costs, along with longer term refurbishment costs are taken into account.